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Thursday, October 18, 2012

Friends of Tax Reform...

...May Not Be Friends of Big Oil

~ Both presidential candidates share a stated desire to lower tax rates and simplify the tax code by eliminating deductions and credits. (And also those hardy but elusive scapegoats, fraud, waste and abuse.) Not everyone is fond of this idea, especially Big Oil:

“Tax reform will be a complicated process,” said Comstock, API’s manager for tax policy. “I think our members are wary of how that process will take place.

Unfortunately, tax reform by simplification entails eliminating "loopholes"—but only yours, not mine. Big Oil doesn't receive much public esteem, and their essentially indefensible billions in annual subsidies are under growing scrutiny. Even powerful House Republican and pro-fossil pol Frank Upton is talking about eliminating all energy subsidies, including for oil and gas.

(Whether also eliminating renewable energy subsidies truly creates a "level playing field" or is the right long term energy strategy is the subject for another post another day.)

API's Comstock says his organization's members "are absolutely willing to be at the table, and engaged" in the process of how tax reform happens.

No doubt. Sure, they're more than willing. Probably much more. They may admit they are not "in a position of asking for anything" but expect a staunchly waged defense of the largesse they've already got. The renewable energy industry, whose (much smaller) subsidies are temporary, has long had to fight for them. Big Oil's subsidies are permanent, had have not had to withstand the scrutiny of renewal. It will be interesting to see how an unpopular industry fights to sustain the unsustainable against combined forces wielding machetes rather than scalpels.